Communities and Local Government CommitteeWritten evidence submitted by Colin Read

1. I write as a landlord of nearly ten years’ experience, and also as an occasional tenant. I currently deal with a total of seventeen tenants, with the majority of my affairs invested in HMOs. I am familiar with the markets in Leeds, Greenwich and Cambridge. I wish to comment primarily on the regulation of landlords and letting agents, regarding both HMOs and regular lets. In general, I am of the opinion that a large part of the market is effectively unregulated, and that tenants suffer substantially due to this. As a landlord this places me in competition with others willing to engage in deceptive business practices, and as a tenant this places me in a much weaker position when trying to identify the suitability of a property, as I have little guarantee that the agent/landlord will properly fulfil the contract.

2. I have frequently heard horror stories from tenants about landlords making unreasonable demands, this is not a matter of a few isolated cases of bad luck, nor did their behaviour lead me to believe that it was down to them being unreasonable. My own experience with agents, as both a landlord and a tenant, leads me to believe that this problem arises from both ignorance of the existing regulation on the part of the agent/landlord, and a belief that nothing will be done if they do not fulfil their duty.

3. The most serious common complaint I have heard have relates to poor property conditions such as damp or broken heating. Although these are covered properly in the Landlord and Tenant Act 1985 (section 10 & 11)[1], experience suggests that landlords often treat such matters as a significantly less urgent than required by law, and thereby require the tenant to suffer a property “unfit for human habitation”.

4. The second common complaint I have heard relates to terms which clearly fall foul of The Unfair Terms in Consumer Contracts Regulations 1999[2]. In particular, interpretation of poorly defined statements to have a meaning which burdens the tenant with a significant cost which was not apparent when the agreement was signed. Although this would fall foul of provision 7, my experience with tenants suggests that it is uncommon that they know their rights under this legislation, and the agents/landlords unreasonable demand is allowed to pass unchallenged. An increasingly common example of this is interpreting terms along the lines of “To clean to (or pay for the cleaning to) a professional standard…” as an absolute requirement that the tenant engage a professional cleaning firm. It is my professional opinion as a landlord, and my reading of the UTCCR 1999 legislation, that any term imparting a material cost upon the tenant should not be hidden deep in terms and conditions running to dozens of pages.

5. The third substantial complaint I have heard relates to promises and agreements made verbally, either by the landlord or the agent representing them, which are later denied. When asked about what happened when a challenge was made the response was that the landlord couldn’t be held liable for promises made by an agent, but the OFT clearly ruled against such refusals in Group 14 of their 2005[3] Guidance on unfair terms in tenancy agreements.

6. It has been argued in the submission to your inquiry by NetRent[4], of which I am a member, that “What is lacking is both the will and the means to implement existing legislation”, but in my experience this is simply not true. What is lacking is knowledge of the legislation amongst landlords and agents, and a belief that they will be held to account if they are in breach of it. A typical tenant without substantial legal knowledge, when faced with an aggressive landlord threatening to take funds from their deposit, will simply acquiesce to the demands. My conversations with tenants, and with other people I meet who rent, suggest strongly that this is not some mere “significant minority”, but a larger fraction, representing a significant problem in the private rented sector.

7. When it comes to the matter of what should be done, and who should do it, I feel that there are two core goals which regulation should accomplish if we are to see a fair and balanced private rented sector:

(a)landlords and agents must demonstrate knowledge of the laws relating to them; and

(b)landlords and agents must be, without excess effort on the tenant’s part, be held to compliance with the law.

8. Because many of the issues I have encountered arise from poorly worded contracts, which often violate existing legislation, I believe there is also a case to be made for a substantially standardised shorthold tenancy agreement. Clearly certain properties would require some additional terms, especially in the case of HMOs, but a minimum standard and a reiteration of the OFT’s guidance would not impede my trading as a landlord, rather it would simplify it as I would not need to spent time finding and reading the relevant contract for that property.

9. Landlord registration is also likely to help me, as I am already registered in Leeds due to HMO ownership. The model adopted in Scotland seems appropriate in many ways, and offers a real way for tenants and regulators to gain some assurance that their contract will be adhered to. Rather than being burdensome legislation, my experience of registration and the compulsory education in Leeds is that shady landlords are pushed out, and my business can be conducted on a fair footing.

10. My last point regards the fees charged by agents, to both tenants and landlords. Research conducted by Which[5] reveals dissatisfaction with such costs amongst tenants, and as a landlord it also feels to me like an artificial market distortion. Tenants have a budget, and search for properties within that budget; I have to compete against agents advertising at an artificially reduced price, and as a result I have the choice of accepting a lower rent or distorting what I expect tenants to pay in the same manner. This is the same form of price distortion seen with budget airline ticket pricing, and the decision there went against those advertising artificially low fares, so I would expect a similar decision in this matter. It is contended by agents that credit checks and the like do incur material costs, but considering mobile phone and car finance arrangements can be made without any such cost I do not believe this argument is honestly made. Even if it were the case, rewarding inefficient business practices is best avoided.

11. I make this submission in good faith, and have tried to reflect in in both what represents my interest as a landlord, and my tenants’ interests. I have intentionally limited my comment to the areas with which I am most familiar, and avoided topics such as housing benefit where I have less experience. I look forward to hearing the results of your inquiry.

January 2013